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Practice Cash Flow and Business Continuity Action Plan

Practice Cash Flow and Business Continuity Action Plan

April 16, 2020
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Cash Flow and Business Continuity Action Plan

The Coronavirus has led to closures of dental, medical and small businesses across the country. As a result many businesses have significantly reduced, furloughed or laid off their staff. These necessary steps may were taken to maintain the viability of the business when “normal” operations can be resumed.

Proposed Federal legislation has provided some relief in the form of cash stimulus, favorable loans for working capital and potentially forgivable loans when used for payroll and other qualifying expenses.

Closing the doors of your business can have an immediate impact on your finances. Now is the time to review your finances and develop a plan. This starts with creating 30, 60 and 90 day action plans for your business and personal life. This unexpected time of closure provides an opportunity to work on your business and to streamline your personal finances.

30 Days – Determine business and personal liquidity needs – defer expenses

60 Days – Cash flow planning to determine reopening strategy

90 Days – Rebuild cash liquidity – prepare business reopening and 60 day sprint

Determine cash requirements for your business and personal needs by creating a budget
Understand the difference between Fixed, Variable and Discretionary expenses and which are essential. Determine which expenses for the business can be deferred or reduced.

Managing Debt and Expenses - Practice, Equipment, Real Estate and Student Loans

• Contact lenders - ask for deferment of interest and principal payments
• Consider refinancing options
• Federal student loans - deferred to 9/30
• Private student loans - contact lender to discuss options
• Reduce variable and discretionary spending

Personal Loans and Residential Mortgages

• Contact lenders for deferment options
• Reduce variable and discretionary spending

Accessing Short-Term Cash**
Over the next 30-90 days, cash flow will likely be tight. As mentioned above, leveraging federal loans and properly managing debt are essential to maintaining any business continuity plan. Finding other sources of cash may be necessary during the short-term.

• Existing cash holdings – business and personal
• Lines of credit – business and personal
• Non-Qualified investment accounts – non-retirement investment accounts
• Qualified investment accounts – retirement accounts (CARES Act removed penalty for early withdrawal)

**There is a recommended sequence for accessing cash reserves so please contact your team of advisors to discuss efficient withdrawal strategies.

This is an overwhelming time and we are here to help. Every business is unique so let’s discuss and determine an ideal strategy for you and your practice moving forward. This difficult time will pass and having a well thought out and constructed plan will help give you and your family peace of mind in this time of uncertainty.

Office 704.248.6771 | |


This is meant for educational purposes only and is not intended to be a forecast of future events or a guarantee of future results. The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Waddell & Reed, Inc. as to the accuracy and is not intended to be used as the basis for any investment decisions. The information presented does not constitute a recommendation of any kind. Please consult your financial advisor before making financial decisions.  (04/20)